Friday, May 04, 2018

In your face, liberal haters!

The New York Times reports that California is now world's 5th largest economy. Only the U.S. as a whole, China, Japan and Germany are bigger. On top of that the vast majority of that growth came from the coastal areas, where the liberals live.

The experiment with tax policy [in Kansas] was such a failure that a Republican controlled legislature not only voted to raise taxes, but did so over the veto of the governor.

So: in your face all you who say that high taxes and regulation kill economic growth! In fact it is, and has always been, the exact opposite. Taxes fund government and infrastructure, both of which are essential components of a robust economy.

4 comments:

"in your face all you who say that high taxes and regulation kill economic growth!"

I might suggest that you had a preconceived conclusion that you favored, and are suffering from extreme confirmation bias. The data you have cited here is not a careful economic study to answer the question that you think it answered.

There are a tremendous number of confounding differences between California and Kansas, besides taxes and regulations. There is also a huge difference between a national policy, vs. a (US) state policy. And there is all the other empirical and theoretical evidence about the effects of taxation, regulation, government, and infrastructure, on long-term economic growth.

And perhaps I can point out that this is objectively false: "it is, and has always been, the exact opposite".

Of course I'm skeptical about your conclusion. But that's actually a minor point. I'm mostly annoyed with the confidence you've expressed, given such weak evidence. This feels more like tribalism, a kind of "ha ha my team is winning and the other team are losers!", than an honest attempt to understand the world.

I would have hoped it would be obvious from the tone and length of that post that it was not intended to be a scientifically rigorous argument, not even by the dismal standards of economics. It was more akin to the sort of emotional outburst you hear from sports fans after their team wins a game.

You don't even have to resort to pointing out confounds to debunk me if you really want to be a party pooper about it. It suffices to point out that the whole concept of comparing GDPs is kind of bogus because it is so highly dependent on population. What really matters is GDP per capita (or something like that), not raw GDP.

Notwithstanding, there are two serious points here: California's *relative* performance since the Great Recession has been better than Kansas almost regardless of how you measure it. Yes, there are confounds, but these two states really are at the extremes when it comes to economic policy: California's government is completely controlled by Democrats, Kansas is completely controlled by Republicans. California has high taxes and high regulation, Kansas has low taxes and low regulation. This is as close as it gets to controlled experiment in economics. And the results are actually pretty clear. They are also consistent with previous experiments of this sort. So no, it's not a slam dunk. But it's a data point.

The second serious point is that conservative pundits often engage in rhetoric like this when talking about liberals. True, that doesn't excuse sinking to their level. But it's damned annoying, and I felt like blowing off some steam.